The Significance Of Apple Sticking With AT&T For The iPad

One aspect of Apple's introduction of the iPad hasn't gotten that much attention: its decision to stick with AT&T. Most of the mention of this fact I've seen has focused on whether or not AT&T can handle the additional data traffic that the iPad will create. Others are complaining that AT&T didn't offer additional service providers. I'd make a different observation: it could show that iPhone users' hopes and dreams that Verizon was waiting in the wings to take over for AT&T later this year won't be realized.

First, the iPad will technically be "unlocked." But don't get too excited. Here's wirelessinfo.com explaining what that means:

The 3G modem on the device is unlocked: it will work with any GSM network that supports the 850, 1900 and 2100 Mhz frequencies. This means it will work with AT&T, but not with T-Mobile in the USA. Abroad, it will work with most GSM networks.

So even though you don't technically have to use AT&T, if you want to use its 3G capabilities stateside, then you still have to use AT&T.

In other words, in the U.S., AT&T will be the only wireless carrier profiting from iPad users wishing to utilize its 3G data connection. It's interesting to note, however, that AT&T is offering data plans with no commitment. Instead, they're prepaid. That's a huge departure from what mobile data users are used to -- usually you have to sign up for something like a 2-year commitment. But the data still only costs $30 for unlimited usage, the same price as the iPhone data plan, but with no commitment.

So maybe Apple simply chose AT&T because it liked that approach -- which customers should love. If no other data providers offered similar pre-paid, no-commitment plans for just $30 per month, then that could have driven Apple's decision to stick with AT&T.

But if Verizon or other network providers were in late-stage talks to carry the next generation iPhone at some point during 2010, wouldn't Apple have given them some opportunity to get in on the iPad fun? I would think so. If Verizon, for example, had been announced as the iPad 3G data carrier, then that would have been a clear signal that AT&T's days as the sole iPhone service provider were likely numbered.

But that's not what happened. We saw a different signal: Apple's allegiance to AT&T reinforced. While it isn't beyond the realm of possibility that we could still get an announcement later this year that Apple is opening up its next generation iPhone to other service providers, I don't see that as terribly likely given that the company has stuck with AT&T for the iPad.

Daniel Indiviglio was an associate editor at The Atlantic from 2009 through 2011. He is now the Washington, D.C.-based columnist for Reuters Breakingviews. He is also a 2011 Robert Novak Journalism Fellow through the Phillips Foundation.
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Indiviglio has also written for Forbes. Prior to becoming a
journalist, he spent several years working as an investment banker and a
consultant.